Ready for Hurricane Season?

If forecasters are right, insurers could face greater hurricane loss events this year than in previous years. But technology can help them to ride out the storms.

Both hurricane prediction guru William Gray of Colorado State University and the National Weather Service forecast the likelihood of an especially active hurricane season.

Sense of Urgency

The past three years have been notable for less hurricane activity, and this may encourage a false sense of security on the part of insurers, according to Robert Muir-Wood, managing director, global risk modeling, Risk Management Systems (RMS, Newark, CA). "I think the memory people have in the industry tends to be fairly short," he says.

Carriers can be prepared for the hurricane season by using predictive modeling capabilities such as RMS's Risk Online. The solution provides probabilistic loss forecasts, updated every six hours, over the Internet, based on a specific hurricane and the latest meteorological data. Insurers using such a solution can plan "a whole series of actions they should be taking on the ground," in advance of storm landfall, Muir-Wood says.

In addition to the annual hurricane forecast, a spate of deadly tornadoes this past spring is providing another weather-related wake-up call, according to Mike Gannon, a spokesperson for risk modeling and catastrophe management solution firm AIR Worldwide Corp. (Boston; see related article below). "Over the last five years, losses for severe thunderstorm peril-which includes tornadoes, hail and straight wind-have been over $23 billion, while for hurricanes it has been about $12 billion," Gannon says. "But insurers are not nearly as aggressive in terms of modeling that risk."

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio